>Taking out huge loans that you don't have a way to repay, to get a degree that has no potential for income, show a serious lack of judgement.
Offering loans to people who have neither the means to repay them, nor the potential to repay them, shows an even greater lack of judgment. As such, the company offering the loan should learn from its mistake, by the person defaulting on the loan.
The decoupling of consequences from decision making creates moral hazard - decision makers tend to optimize their decisions in their own best interests:
-Banks lend to people unlikely to repay.
-Academic institutions raise tuition to fund showpiece buildings, climbing walls, and gourmet dining halls that not a required component of a top education.
While individuals should be held responsible for their poor decisions, there also needs be some accountability for the financial, government and academic institutions creating this systemic moral hazard.
My personal preference is to retroactively make all student loans eligible for default which penalizes banks and the government for creating the moral hazard of undisciplined lending, and limits academic institutions' ability to continue to increase costs going forward.